For first-time ever, Rupee hits all-time low of 80 against US dollar
New Delhi, July 19: As foreign investors continued selling Indian equities, the rupee hit another record low. The Indian rupee hit 80.06 per dollar for the first time ever on Tuesday.
The currency has been impacted by the nation's record-high foreign equity outflows of about $30 billion so far this year as well as concerns about a widening current account deficit in the face of high oil and commodity prices.
India's policymakers have taken a series of steps to halt the rupee's slump, from intervention to increasing import taxes on gold, as the pressures of imported inflation are increased by a weakening rupee. As the hawkish Federal Reserve draws money to the US, other emerging market currencies are also feeling the pressure.
According to a Bloomberg survey conducted in late June, the deficit in India's current account, the broadest measure of external finances, will likely increase to 2.9 percent of the gross domestic product in the fiscal year ending March 31. This is nearly double the amount recorded the year before.
Now, the main concern is that after the rupee breached the 80-to-a-dollar level, the slump could be even steeper.
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The value of the rupee has been steadily declining, which has been detrimental to domestic stocks. Foreign investors often suffer unfavourable effects from rupee depreciation.
According to stockbroker Prithvi Finmart, "We expect a rupee to remain volatile this week and could hold its key support level of 80.5500 on a closing basis."
In addition, sources claim that Apple, a maker of phones and gadgets, plans to cut back on hiring and spending, which is likely to have dampened equities in India and other Asian countries.
According to Deepak Jasani, Head of Retail Research at HDFC Securities, "Asian shares are subdued Tuesday after Apple Inc.'s plans to slow hiring highlighted concerns that aggressive monetary tightening to tackle inflation threatens an economic downturn."
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-PTC News
